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The occurrence of “inside information” related to a company with listed securities triggers a wide range of duties and prohibitions, including not only a prohibition on insider dealing, but also a duty on listed issuers to disclose inside information to the market. Recent precedents confirm that inside information may occur at a very early stage of a takeover process.

Inside information

Inside information is defined as precise information relating to financial instruments, the issuer of such instruments or other circumstances that may noticeably influence the price of such financial instruments, or related financial instruments, and that is not publicly available or generally known in the market. Two essential criteria must be met in order for non-public information to fall within the scope of the definition: the information must be of a precise nature; and the information must be likely to influence the price of the instruments noticeably.

The requirement that non-public information must be likely to noticeably influence the price of the relevant instruments refers to the so-called “reasonable investor test” – non-public information that a reasonable investor would be expected to take into account in making his investment decisions should be regarded as inside information.

Geir Sviggum is a partner at Wikborg Rein in Shanghai and Arne Didrik Kjørnæs is a senior partner at Wikborg Rein in Oslo. Tormod Ludvik Nilsen, a senior associate at Wikborg Rein in Shanghai, also contributed to this article